Home affordability drops to lowest level in 10 years

Home ownership is becoming increasingly unaffordable, according to a new report.

Continue to see what prices big houses draw in Texas' smaller towns.

Home ownership is becoming increasingly unaffordable, according to a new report.

Continue to see what prices big houses draw in Texas' smaller towns.

Photo: Mark Mulligan, Houston Chronicle / Staff Photographer

Photo: Mark Mulligan, Houston Chronicle / Staff Photographer

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Home ownership is becoming increasingly unaffordable, according to a new report.

Continue to see what prices big houses draw in Texas' smaller towns.

Home ownership is becoming increasingly unaffordable, according to a new report.

Continue to see what prices big houses draw in Texas' smaller towns.

Photo: Mark Mulligan, Houston Chronicle / Staff Photographer

Home affordability drops to lowest level in 10 years

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For the average worker, buying a home is increasingly out of reach. A recent study shows that home affordability has hit a 10-year low.

The report by Attom Data Solutions defines affordability as the percentage of an average salary it would cost to buy a median-priced home. Nationwide, an average earner would need to spend 37 percent of his or her income to buy a median-priced home, 8.5 percent above the historic average.

High mortgage rates have contributed to the increasing strain of buying a home -- Houston's average mortgage rate recently hit 5 percent, the highest it's been since 2011. Harris was also one of many counties in the report where annual home price appreciation outpaced average wage growth.

"Rising mortgage rates have pushed home prices to the least affordable level we've seen in 10 years, both nationally and at the local level," said Daren Blomquist, senior vice president at Attom Data Solutions.

Tendayi Kapfidze, chief economist at mortgage marketplace LendingTree, estimated that homebuyers are able to borrow 10 percent less than a year ago because of the rise in interest rates. "This means at each price point, the number of buyers is falling, reducing demand. This has had immediate effects on the number of houses sold and will over time reduce the pace of home price increases."

However, Kapfidze says the slow in home price appreciation is no cause for alarm.

"Home prices have been outpacing incomes since 2012 at a pace that is unsustainable, and a period of consolidation is healthy for the housing market," he said.

In some counties, the unaffordability of homes makes it dramatically clear why more and more households are opting to rent.

In Brooklyn, buying a median-priced home would require 134.8 percent the salary of an average earner, meaning that even if the average Joe suddenly received a raise of one-third of his salary and dedicated every dollar of his newly inflated paycheck to paying off the home, he still could not meet monthly costs.